Harris Teeter Inc. - Company Profile, Information, Business Description, History, Background Information on Harris Teeter Inc.

P.O. Box 33129
Charlotte, North Carolina 28233

Company Perspectives:

The Harris Teeter aim is to be absolutely the best grocery retailer as measured by each and every customer. The Harris Teeter mission is to: take excellent care our customers; take excellent care of our fellow associates; keep our stores clean; sell only fresh products; keep our shelves properly stocked.

History of Harris Teeter Inc.

Harris Teeter Inc. has grown from a North Carolina grocer into a chain of almost 140 grocery stores throughout the Carolinas, Tennessee, Virginia, and Georgia. While the company maintains stores in both urban and rural areas, Harris Teeter's primary focus is on an upscale urban clientele with a taste for quality and variety in food. Harris Teeter is a subsidiary of Ruddick Corporation, a holding company whose other primary interest is in American & Efird, Inc., a manufacturer of sewing thread. In 1996 Harris Teeter reported sales of $1.83 billion, 4.86 million square feet of store space, and $259,160 in weekly per-store sales.

Harris and Teeter Team Up in the 1950s

The chain that became Harris Teeter started as two small North Carolina enterprises in the late 1930s. The first of these was Harris Super Market, opened in Charlotte in 1939 by W. T. Harris, who had borrowed $1,500 to start the business three years earlier. Though nothing like the vast shopping palaces that would eventually characterize the Harris Teeter chain, Harris Super Market had several notable distinctions: it was the first air-conditioned supermarket in its county, and it stayed open until nine o'clock on Friday nights. Also during this time, in the town of Mooresville, North Carolina, Paul and Willis L. Teeter opened Teeter's Food Mart with $1,700 in capital.

The two stores grew into small chains, and by 1958, the Harris and Teeter companies had begun to merge their buying efforts and storage facilities. On February 1, 1960, they formally united as Harris Teeter Super Markets, Inc., with a combined force of 15 stores. Soon thereafter, in Kannapolis, North Carolina, they opened their first new Harris Teeter store, and by 1963, the company had a total of 25 stores. Harris Teeter opened a newer and larger warehouse, with offices, and in the 1960s made the first two of many acquisitions. First the company purchased five Tilman's Grocery stores in the North Carolina town of Shelby, then it added an independent store in Gastonia and another in Charlotte.

Acquisition Followed by Growth in the 1970s and 1980s

In 1969, Harris Teeter itself was purchased, this time by Ruddick Corporation. The latter had begun business in 1919 as R. S. Dickson & Company, an investment banking firm based in Gastonia, North Carolina. Founder Rush Dickson offered a capital planning service to public and private firms, and in 1968 his sons Alan and Stuart made R. S. Dickson a subsidiary of Ruddick Corporation, along with Efird Mills, a textile company. The corporation had provided financial backing to Harris Teeter, and by purchasing all of the chain's assets in 1969, Ruddick--traded on the New York Stock Exchange--made Harris Teeter its third subsidiary.

In the 1980s Harris Teeter began an expansion program, largely by acquiring other stores and companies. First came Hunter Dairy, a firm older even than Ruddick Corporation. In 1917, bookkeeper Harvey B. Hunter had started Hunter Dairy, and in 1921 he took over the Selwyn Dairy Farm in Charlotte. In its early days, Hunter Dairy serviced only the nearby area and developed a reputation for delivering its product within four hours of the time the cows were milked. Harvey Hunter was an innovator in his cooling system, using brine water, and he took what was then considered extraordinary care to prevent bacteria or spoilage. In 1937, eight years after the company acquired Burchmont Farm in Charlotte, Hunter began pasteurizing its milk--a first in the area--and a decade later it built a new, modern facility near its Burchmont Farm location. From 1956 to 1980, Harvey Hunter's son Charles ran the company, and in 1980 his younger brother James became general manager, continuing in that position after the acquisition of Hunter Dairy by Harris Teeter in the same year.

Harris Teeter's growth by acquisition continued. In 1984, Ruddick purchased Food World, a Greensboro, North Carolina-based supermarket chain founded in 1917 by George E. Hutchens, and merged it with Harris Teeter. Food World had 52 stores in North Carolina and Virginia, giving Harris Teeter (which had already expanded into South Carolina and Tennessee) stores in four states. With Food World's 3,000 people, Harris Teeter now had 7,000 employees--or "associates" as it preferred to call them--making it the second-largest food chain in the Carolinas. The Food World acquisition also added a distribution center to the company's holdings.

Four years later, in 1988, Harris Teeter again added 52 new stores through an acquisition, this time purchasing the supermarkets of Big Star, as well as a warehouse from the Grand Union Company. In 1990, ten years after acquiring Hunter Dairy, Harris Teeter bought a Borden Dairy plant, and in 1991 it added a 139,000 square foot freezer facility to Hunter's 550,000 square foot nonperishable storage and distribution facility in Greensboro.

During the early 1990s, Harris Teeter moved its corporate offices to a 97,000 square foot building in Matthews, North Carolina. With the purchase of five Bruno stores in South Carolina in 1993, Harris Teeter increased its presence in that state, one of America's most competitive arenas for grocery stores. Perhaps even more competitive, however, was the Atlanta market, and Harris Teeter moved into Georgia in the fall of 1993 with the opening of a new store in Atlanta's upscale Buckhead district.

Coffee Bars and Floral Shops in the 1990s

Atlanta, with a high per capita income and a large population of transplants, represented a potential growth market for a high-end grocery chain. And yet it was a highly competitive area. According to Progressive Grocer, in 1994 the city had 4.2 chains competing for every customer, as compared to 2.9 nationally, and though population growth was explosive, supermarket square-foot growth had outpaced it by seven percent. "Every supermarket operator thinks his market is the most competitive in the country," Progressive Grocer announced in 1994, adding that "right now, Atlanta retailers may be correct." Among high-end chains, Bruno's had not succeeded in that market, but Publix Super Markets was making inroads, and now Harris Teeter moved in, with an appeal to a somewhat higher income level than that of Publix.

One observer called the Buckhead store a "yuppie heaven," while referred to it "a giant deli with a few groceries thrown in." Some questioned how the facility, with a floral shop, coffee bar, sushi bar, juice bar, deli, and plenty of other attractive amenities, could possibly make money. Yet it apparently did, and Harris Teeter continued to expand in the Atlanta market, with stores in Dunwoody in 1995, and in the area near Emory University in 1997. While the company eventually cut back on the features at the Buckhead location, it began to set the tone for Atlanta supermarkets, which started to adapt to a more high-end strategy.

Harris Teeter's activities in Atlanta are noteworthy precisely because of that market's high competition factor. Though conditions may have been marginally less fierce in other areas where Harris Teeter operated, its base was within some of the fastest-growing areas of the United States, including the "research triangle" of Raleigh-Durham-Chapel Hill, North Carolina, and parts of South Carolina.

To an extent, the company did not follow set patterns with its stores, as Progressive Grocer explained in a 1995 profile: "the 139-store chain does not believe in prototypes. It prefers something new every time it opens a store. If the new approach works, it will be used in some, but not all, new and remodeled stores." Instead of concerning itself with economies of scale when entering a new market--that is, establishing several stores at once to reduce per-store startup costs--Harris Teeter, as it demonstrated in Atlanta, was willing to open just one store at a time.

"We worry about the neighborhood, not the entire market," Fred Morganthall, vice-president for operations, told Progressive Grocer, adding "we only need one store in a market to make it viable." In its concern for the economic environment, the company divided its facilities into two types: neighborhood stores and community stores. Neighborhood stores, which comprised approximately two-thirds of all Harris Teeter operations in the mid-1990s, were the so-called "yuppie heavens," which catered to customers who, in Morganthall's words, "want good variety, chef-prepared entrees and ... every new frozen food entree and ice cream that comes on the market." Community stores, by contrast, appealed to what Morganthall called the "Mayberry RFD" clientele, a reference to a television show in the 1960s set in rural North Carolina. At community stores, the appeal was more broad, with greater emphasis on customers shopping for bulk items such as "25-pound bags of flour and 10-pound bags of sugar."

A Continuing Urban Emphasis for the Future

Despite the apparent lack of a prototype, there are certainly key elements common to most Harris Teeter stores, a fact acknowledged by Morganthall in 1994 when he noted that the company was moving from a typical store size of 33,000 square feet to one of 50,000 square feet. He added in an interview with Progressive Grocer that the company's primary interest is in 45,000 square foot urban stores. Thus the "typical" Harris Teeter store is large, urban, with an upper-middle class customer base; and certain other features distinguish the chain.

One of these features is the level of service, which Service Industries Journal highlighted in an April 1992 article: Harris Teeter employees are encouraged to "take excellent care of customers," an element of the company's mission statement. Another key feature is the size and design of the stores, which are typically very large&mdash much as 60,000 square feet, slightly larger than a football field--with high ceilings, elegant lighting, and pleasing architectural features that, in the words of Chain Store Age, "recall a turn-of-the-century market hall."

The company also places a high emphasis on selection, with dozens of brands or variations on a certain item--salad dressing, frozen pizza, bagels, or beer. Among meats, for instance, the choices far exceed the traditional chicken, beef, pork, and lamb. Even customers with a taste for rattlesnake, if they place a special order, can purchase this delicacy fresh. The company has a number of on-duty chefs, working in the deli, the bakery, and various specialty areas such as a salad bar where customers can have chef salads made to order. On weekends in some stores, Harris Teeter features omelets with a choice of ingredients, which customers can enjoy with a cup of coffee chosen from a wide selection at the coffee bar.

Though Harris Teeter stores often include plenty of non-food items, the emphasis is clearly on food. When it opened in 1997, the Emory University-Sage Hill Shopping Center store in Atlanta was remarkable for comprising two stories, a result of the fact that when the company purchased a run-down Winn Dixie that it converted--in the process sprucing up the shopping center and repaving the parking lot--it underestimated its need for size. Among students at the nearby campus and residents of adjoining neighborhoods, a considerable Jewish population prompted the company to feature a kosher deli run by a rabbi at the store. There was also large coffee bar, which Emory students kept busy for much of the day. Moreover, in addition to its many food-related features, the store had a large section devoted to greeting cards, which sold briskly with students. Unlike many grocery stores, however, offered neither a pharmacy nor many general merchandise product lines. Morgenthall stated a key company principle when talking to Progressive Grocer: "We go after the customer who likes food; we don't have a lot of general merchandise."

Amenities such as those at the Emory University store came with a price, and customers whose primary concern was cost tended to shop at chains other than Harris Teeter. The company, which ironically started as two different small-town grocery store chains, kept its focus on bigger stores in the more lucrative and upscale urban markets. In 1996, for instance, Harris Teeter sold seven stores in what Ruddick Corporation's annual report called "less urban markets," and closed down three small stores. It also replaced several older facilities, and as a result had 134 stores at the end of the year--five fewer than when it began. Yet sales increased by five percent, a fact which the annual report attributed to "customer acceptance of larger, new-format stores, strong feature plans, merchandising and advertising, strong holiday sales, and a 4% increase in store square footage during the year." During the mid-1990s, the company also instituted its VIC ("Very Important Customer") program, which made use of specially coded cards presented at the time of purchase, to assist in tracking its best customers' buying habits.

Harris Teeter was involved in a number of community-oriented activities during this time, and often the opening of new stores was accompanied by donations to charitable associations. When the company opened a new facility in Nashville's Peartree Village Shopping Center in April 1997, for instance, the company announced donations ranging from $2,000 to $3,000 to organizations such as the Special Olympics and the Nashville Symphony. Harris Teeter was also involved in such activities as Child Safety Awareness Day, a scholarship program at UNC-Charlotte, and Metrolina Food Bank. Through such efforts the company pledged to continue fostering a sense of community pride in the locations Harris Teeter stores serviced. And such locations were bound to increase in number, as the company remained focused on an aggressive expansion program in the late 1990s.

Additional Details

Further Reference

Bennett, Stephen, "Best in the East," Progressive Grocer, March 1993, pp. 36-53.Lewis, Leonard, "A Little Bit of Country and a Little Bit of City," Frozen Food Age, August 1994, p. 20.------, "Harris Teeter Takes Honors as '94 Master Merchandiser," Frozen Food Age, August 1994, pp. 1, 14+.Radice, Carol, "Destination: Harris Teeter," Progressive Grocer, May 1997, pp. 62-70.Sparks, Leigh, "Customer Service in Retailing--The Next Leap Forward?," Service Industries Journal, April 1992, pp. 165-84.Weinstein, Steve, "Georgia on Their Minds," Progressive Grocer, October 1994, pp. 99-104.------, "Harris Teeter Dares to Be Different," Progressive Grocer, April 1995, pp. 43-46.Wilson, Marianne, "Harris Teeter Celebrates Food Through Design," Chain Store Age, December 1996, pp. 168-69.

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